Politicians turn to crowdfunding for campaign cash

VANCOUVER -- Forget the rubber-chicken lunches and campaign cheques. A Coquitlam politician has turned to the crowdfunding site Indiegogo to raise campaign funds for the upcoming Coquitlam council byelection.

But while Coquitlam candidate Bonita Zarrillo reached her funding goal in a few weeks, she was seeking only a modest $3,000, making her campaign a small one in an arena where tens and even hundreds of thousands of dollars can be raised in a matter of hours.

For Zarrillo, though, it was more than just the dollars: She sees crowdsourcing campaign funds as a way of creating community and reaching young people. "It's a good way to get young people involved and potentially to the polls," said Zarrillo. "It's an easy way to get your campaign message across. I'm also doing fundraising in more traditional ways, reaching out to key stakeholders in my community. This was another vehicle to raise funds."

So far 40 backers have contributed $3,315 since she launched the campaign at the end of August. It remains open until Oct. 25, the day before the Coquitlam byelection to replace councillors Linda Reimer and Selina Robinson, who won seats in last May's provincial election.

Zarrillo said crowdfunding allowed her to reach friends and family both locally and around the world and she found that friends of friends also contributed.

"I believe it will grow in popularity," she said of crowdfunding for political campaigns. "The whole idea is to create a connection, where somebody feels connected."

It's a trend that has taken hold in the United States; but while crowdfunding has been used in Canada by public interest and advocacy groups to raise money and awareness around issues, politicians haven't been as quick to follow suit.

In Edmonton, city council candidate Nita Jalkanen has launched an online campaign at fundrazr.com, a crowdfunding website created by Vancouver's ConnectionPoint Systems.

Bret Conkin, ConnectionPoint's vice-president of marketing, said he expects next year's civic elections could see many more politicians turning to online crowdfunding. "The NPA (Non-Partisan Association) and Vision have both talked to us about using it for their next campaigns locally and a likely mayoral candidate is looking at it as well. I would absolutely anticipate this is something you are going to be seeing."

Crowdfunding for politicians can also be a way of building grassroots support. Recently Oakland mayoral candidate Bryan Parker used a fundraising campaign on Crowdtilt.com to launch his candidacy, raising almost $60,000 US. In Australia, Cathy McGowan used online crowdfunding in her successful grassroots bid to oust Liberal MP Sophie Mirabella from what had been considered a safe Liberal seat.

Conkin said fundrazr.com has had hundreds of political campaigns that have each raised $200 or more, mostly in the U.S.

Just as with Zarrillo's campaign, a major motive often isn't just money, but marketing.

"Our political campaigns tend to be two, three, $6,000 but they're getting that market validation piece," said Conkin. "You are building a community and a following.

"The funding is one benefit, but there are others."

Conkin said for politicians who are trying to figure out how to make social media work for them, crowdfunding can be a boost that has a much greater impact and reach than a simple Facebook page. While a politician can post content that is seen by followers, a crowdfunding campaign on FundRazr lets supporters share their comments and donations to multiple social media platforms.

"It's like a virtual lawn sign for the candidate, with the bonus of showing financial support," Conkin said. "In the case of FundRazr, that supporter activity is then seen by their friends, creating a viral effect. A post or share by the politician on a Facebook page is only seen by current fans and posts by other supporters are often hidden.

"In our case, we've been able to determine that you get 300 per cent more visibility (with a fundrazr.com contribution) than a Facebook share alone."

Online crowdfunded donations aren't prohibited by electoral or tax legislation in Canada. However, they are subject to the same rules regarding eligibility of donors, disclosure and other issues that apply to all political donations and those rules vary for federal, provincial and municipal elections.

Louise Sawdon, manager, electoral finance for Elections BC. said she hasn't heard of provincial candidates using crowdfunding sites to raise money although candidates can raise funds online through Pay Pal and credit cards as long as they meet the requirements of the Election Act.

"No matter how they receive the contributions they (political candidates) have to follow the law," she said.

That includes such provisions as disclosure, which requires contribution details including the name of the contributor and the donor class, whether it's an individual, company, trade union or other eligible donor, for all contributions greater than $250. All donors' names and addresses, except in a limited case in which anonymous cash donations can be made at social functions with individual donations less than $50, must be kept. However, for donations under $250, the reporting requirement only calls for reporting the class of contribution — for example, if it is from an individual, company, union or other eligible donor classification.

Municipal elections finances are governed by the Local Government Act, which is expected to change before the 2014 municipal elections, following the findings of a local government elections task force and a white paper released this fall. Among the changes proposed for the new legislation — anonymous donations would no longer be allowed in municipal elections.

Under current legislation, campaign contributions with a value of no more than $50 can be anonymous. Contributions to municipal candidates are not eligible for Canada Revenue Agency tax credits, which cover federal and provincial contributions.

Zarrillo said that while contributors to her Indiegogo campaign may choose not to have their names and the amount of their donation published on the site, that information is required for a donation. Zarrillo said she has the complete list, with names, addresses, amounts and dates and so can fulfil reporting requirements for the contributions.

John Enright, spokesperson for Elections Canada, said the question of crowdsourcing campaign funds hasn't come up before. For federal elections, the names of donors who contribute more than $200 are listed in a candidate's election report and any amount over $20 must be logged and receipted, although the names aren't listed in the report. Unlike provincial and municipal campaigns, only individuals can contribute to federal campaigns and the source of the funds must be Canadian, not foreign.

"I would equate it to a donate now button on a website," Enright said of how contribution rules would apply to online crowdfunding.

Mike Volker, director of Simon Fraser University's Innovation Office, said crowdfunding, which has been successfully used for a range of purposes, from start-ups and products to charities, could work well for politicians.

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Politicians turn to crowdfunding for campaign cash

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